Canada's Condominium Magazine
Here is what you need to do to become a billionaire “superentrepreneur.” Live in a country with low tax rates, a low regulatory burden, and a government that encourages entrepreneurship (mainly through low tax rates, especially capital gains tax). Go to school, and stay there until you have a Ph.D. Be creatively destructive, and choose a field that is in growth mode.
A report called “SuperEntrepreneurs . . . and how your country can get them” by Tino and Nima Sanandaji for the Centre for Policy Studies, examines one thousand self-made men and women who have made at least $1 billion and have made it onto the Forbes magazine lists of the world’s richest people between 1996 and 2010. The authors refer to these people as the SuperEntrepreneurs, and try to determine what makes one country produce more of them than another. Mexico, for example, had none during the time covered, while Israel had almost two per one million inhabitants, putting it in second place after Hong Kong. The US, meanwhile, has been four times more entrepreneurial than Europe.
The authors define entrepreneurship as the creation of innovative, growth-oriented firms. It is not the same as being self employed. In fact, countries with high rates of self employment tend to have low rates of “high-impact entrepreneurship,” an example being Greece. Greece has high rates of self employment because the Greek economy does not favour entrepreneurship, they argue.
This report has got some British commentators and media types wringing their hands, both for its revelation that Britain is not in the top ten countries for entrepreneurial innovation, and for its conservative approach to economics.
The countries that have the highest rates of entrepreneurship, such as the US, Canada and Israel all have a highly educated population and superb universities. However there are several countries that have highly educated population yet under- perform, such as France and Belgium, or for long periods of time even Britain. It appears that education, like hard work, is necessary for entrepreneurship, but not enough if other components are lacking.
SuperEntrepreneurs . . . and how your country can get them
Britain, it turns out, is in eleventh place on the list of superentrepreneur producers, and this rankles. Britain, after all, prides itself, as prime minister David Cameron boasted recently, for having “invented everything worth inventing.” Why is the cradle of the Industrial Revolution falling behind Canada and Hong Kong and Israel in producing billionaire entrepreneurs?
The authors’ answer, which is surely music to the ears of conservative British politicians these days, is taxes. Fewer of them, that is. If Britain reduced its capital gains tax and lowered income taxes, it would encourage potential entrepreneurs. At present, earnings over £150,000 ($276,524) are taxed at 45 per cent, but some leftists want to see that threshold more than halved, to £62,000 ($114,296). Conservative backbenchers, on the other hand, want Cameron to scrap the 45 per cent tax altogether.
Not everyone agrees that lower taxes would lead to more superentrepreneurs. The father of Bill Gates famously said, in the foreword to The Self-Made Myth, that entrepreneurs do not become successful all on their own, but with the help of many others. Paying “progressive taxes” is simply “giving back to support the nation that made one’s wealth possible.”
Another point that must be irksome to the British is the “fact” that countries that have inherited the English legal system—the United States, Canada, Australia—are all more entrepreneurial now than the “mother” country. Countries whose legal system has English origins have the highest rates of entrepreneurship of all, a fact attributed to different concepts of property rights and even the degree to which there is a rule of law.
Regardless of the way politicians may choose to view the report, it does make a real effort to define something intrinsically interesting: how do some people become billionaires by creating something new and selling it to the rest of the world?
Here is the final distillation of what they learned from examining the success of more than one thousand billionaire entrepreneurs.
[colorbox title=”Seven Characteristics of the Entrepreneur*” color=”#333333″]
The Seven Characteristics that will increase your chance of making it onto the Forbes list:
- Entrepreneurship is hard, risky and tough. There is a good chance that you will fail in your attempts to create the next Google.
- Entrepreneurship is often knowledge intensive. It is no coincidence that Larry Page and Sergey Brin, whose academic research explored the mathematical properties of the internet, were the ones that founded Google.
- Entrepreneurship is a numbers game. If you only start one company, and pursue a single business idea, you are much more likely to fail than your neighbour, who tries a number of different ideas over a long period of their life.
- Entrepreneurship is increasingly specialised, and supported by an infrastructure. If you have a great idea, and can attract the aid of venture capital, you will be much more likely to succeed.
- Entrepreneurship is more common in certain industries than in others. You can potentially become a billionaire pursuing almost any business idea, but are much more likely to succeed if you do so in a rapidly growing (and novel) field – as biotechnology and IT have been during the past decades.
- Entrepreneurship typically requires industry experience. Steve Jobs worked at Atari before founding Apple. Microsoft co- founder Paul Allen worked as a programmer for Honeywell.
- Entrepreneurship requires scaling up. Edison gained over 1,000 US patents not merely through his own work, but by creating the first industrial research laboratory. [/colorbox]
*From “SuperEntrepreneurs . . . and how your country can get them”